The Task Force's work should be welcomed. Their framework will help companies think through and disclose how climate change will affect them financially. In turn, that will help institutional investors manage the risks to our pensions and savings and policymakers keep the financial system stable.

The Task Force only explicitly asks companies to prepare a 2°C scenario analysis, despite noting that range of scenarios would be preferable. This approach is likely to encourage companies to place more emphasis on risks from the transition to a low carbon economy than risks from physical impacts of climate change.

Second, the physical impacts of climate change affect a broader range of companies than the 'usual suspects' targeted by the Task Force. These physical risks aren't some distant threat either. At the time of writing heat waves, that risk health, well-being and productivity have struck Australia and floods, which can ruin homes and infrastructure and disrupt global supply chains, have hit California.

Figure 1: The UK Government's assessment of the top six climate change risks for the UK

A prudent approach to managing climate risk is to 'aim for 2°C, plan for 4°C'. As things stand, the Task Force's advice appears to be 'plan for 2°C'. That is far from enough. In the next iteration of its recommendations the Task Force should explicitly ask companies to publish a scenario plan for a 'high-impact' scenario, consistent with upper estimates of scientific projections of potential temperature increases.

Giving an indication of these risks would not be difficult. The Paris Agreement has established the direction of travel for climate policies and countries' plans are in plain sight. As such, the Task Force should ask for companies' exposures to these political risks by jurisdiction.

As things stand then, under the Task Force's framework companies are unlikely to measure the risks of climate policy failure or rapid climate policy 'success'. That doesn't bode well for their management.